Welsh homebuyers set to benefit from new tax rules as threshold raised

The threshold for the Welsh version of stamp duty is set to rise, following on from the stamp duty cut for English and Northern Irish buyers which was announced on Friday.

As a result of new measures announced by the country’s Finance Minister, people purchasing homes in Wales for less than £225,000 will pay no tax.

The threshold for paying Land Transaction Tax – the Welsh equivalent to stamp duty land tax – will be increased from £180,000, with the change coming into force from October 10. As part of the changes, there will also be a small rise in the rate of Land Transaction Tax for homes that cost over £345,000.

With prices rising in Wales over the last two years, the move aims to make sure that the threshold for paying tax reflects these higher prices, with people buying homes under £225,000 not paying any Land Transaction Tax.

Those purchasing a home for less than £345,000 will see a cut in the tax they pay, up to a maximum of £1,575.

However, as mentioned above, people buying homes worth more than £345,000 will see an increase – up to £550. However, such transactions only represent around 15% of property purchases in Wales.

The government says that all other elements of Land Transaction Tax will remain unchanged, ‘meaning there are no tax reductions provided to those purchasing second homes in Wales, unlike with stamp duty land tax in England’.

Rebecca Evans, Minister for Finance and Local Government, said: “This is a change tailored to the unique needs of the housing market in Wales and contributes to our wider vision of a fairer tax system. 61% of homebuyers will not pay tax on their purchase. These changes will get support to people who need it and help with the impact of rising interest rates.”

She added: “We also know that helping people at the lower end of the market will have a particular benefit for first time buyers. We help people buy their first home in a number of different ways, including shared ownership and help to buy schemes, and I am pleased to be able to extend that support through these changes to Land Transaction Tax.”

The changes have been made as a result of last week’s changes to SDLT in England and Northern Ireland announced by the UK government in Kwasi Kwarteng’s mini-Budget.

Originally, the Welsh Government was considering making changes at the Budget later this year, but it decided to bring this forward to provide the housing market with greater clarity.